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Killing F&I

I’ve been writing about this for years. As a matter of fact, I’ve screamed it from the mountaintops until the echoes rang repeatedly around the industry. I’ve watched it gain momentum as a consortium of vendors, manufacturers and other assorted rogues and pirates dreamed and schemed up a plot to assassinate the F&I department.

They’ll sell it to the dealers by promising to reduce the time it takes to complete a sale. They’ll talk about the magical customer experience it creates when the horrible F&I process is eliminated. They’ll tell you any competent salesperson can present and sell the products and make the proper disclosures. You’ll ask who exactly will deliver and disclose the contract and all the documents and get the deals worked. That’s where it gets a little sketchy.

But that’s not even the sketchiest part. Let’s look at the real motives behind this slow-motion trainwreck.

First of all, what they’re saying to employees is not what they’re selling and telling dealers. They’re telling dealers the F&I department has the highest payroll and cost of operation. Get rid of it, they say. You’ll save so much money that it won’t matter if you make a little less gross per deal.

Don’t buy it. The real reason for this push is because F&I is and has always been the one part of the process where they couldn’t automate online profitably — until now. The resistance has been too much for these evil minions with their hidden agendas. Without exception, every one of the big, public, AutoNation-level retailers views car sales as a loss leader to get the financing profit. Their F&I operations are right at or above $1,500 per retailed unit and happy to settle for the manufacturer volume bonus money.

That’s not good enough for the lead providers and other vendors who have consistently taken over every other aspect of the sale. They want to control your profits and charge more than you make on the sale for the privilege of lowering your profits on customers who would have bought from you anyway. These are the same people who are trying to get a piece of your service business and force you to join their online lender referral schemes. They are not your friends.

Let me tell you why eliminating F&I will never work. Let me tell you why dealers who get conned into closing down those offices are going to lose substantial profits. And let me tell you why they’re going to get sued and prosecuted repeatedly and lose every case.

The reason F&I managers are the most highly paid managers in the dealership is because they have studied their profession with more schools and specialized training than everyone but the service technicians. They protect the dealership legally and they understand the importance of compliance.

Excuse me, but you can’t even get salespeople to consistently say “Welcome to ABC Motors” or remember to check in the keys after a demo ride. Most of them screw up the CRM with minimal data input and incorrect information.

The high turnover rate in that department ensures that a large percentage of your sales team will never be trained on correct, ethical and legally compliant disclosure and product sales. They will never sell F&I products with the same passion they sell the car. In our heart of hearts, we all know that’s true. Think about it: How many of your salespeople are scared to death to ask for the money? How many of them sabotage finance because they’re afraid they’ll spook the customer?

Most, if not all, of your sales professionals will give the products away, tell the customers the wrong rates and blow the legal and ethical disclosures. For every great salesperson who might be able to do it correctly, you’re going to have five that get you in trouble. It’s going to be a massive cluster-fiasco.

The vendors and the manufacturers who are promoting this idea do not have the customers’ best interests in mind and they certainly don’t have the dealerships’ best interest at heart. The customer experience chorus is a smokescreen. It’s really all about greed, control and, ultimately, destroying the dealer model as part of an ongoing attempt to hijack our industry. You’ve been warned.